Checking Contractors' Insurance Policy Exclusions

The Insider spoke with Jonathan Steward, vice president/producer, O&S Insurance Brokerage Group, to discuss why there are more and more exclusions in contractors’ insurance policies—and how to guard against them.

Insider: New York State’s one-of-a-kind Scaffold Law states that if a worker is injured in a fall caused by gravity, the owner of the building is automatically at fault. Is that what’s driving these exclusions and changes in the insurance policies?

Steward: Yes, 100 percent. The Scaffold Law is actually the biggest issue, I believe, that New York real estate is dealing with right now. These claims coming in range from six to seven figures. It’s pretty incredible how large they can be, and they’re easily avoidable if you contact your insurance broker, just to have a quick look at what’s going on and make sure that something like that can’t occur.

Insider: I hear a lot of stories about exclusions. Here’s one I heard recently. There was a roofer who had an insurance contract where his workers were covered – provided they were standing on the ground when they were injured. I don’t know if that’s apocryphal, but aren’t there some pretty strange exclusions in these policies that building owners need to be aware of?

Steward: Yes. It’s funny you mentioned the roofer exclusion because I actually came across an issue similar to that. About three months ago, I was reviewing an insurance policy and they had a contractor who was performing roofing work. And in there they had a height exclusion – roofing work with a height exclusion! There’s no coverage there if anything happens above a certain height. So that’s a big, big issue.

Insider: What’s the best way for building owners to make sure that a contractor does not have such exclusions in his insurance policy?

Steward: The best way to do that is to contact your agency or broker and have them thoroughly review the policy. And from there, determine which exclusions they have on their policy. These policies can range into dozens and dozens of pages, and that’s why we tell our clients, "Listen, contact us before you do any work. We’ll dig into it. We’ll do all the legwork, see exactly what we have an issue with, what we think is problematic. And from there, we’ll make the proper adjustments or give our advice as to how we feel we’re properly protecting you as the owner.